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USGC Creates U.S. Export Opportunities in Russia
USAgNet - 10/03/2008

As Russia continues to make the transition into a free market economy, the U.S. Grains Council has worked for the past 12 months with Russian grain traders, teaching them how to utilize the international grain trade market. Such efforts, according to Chris Corry, USGC senior director of international operations for Rest of the World, not only give Russian traders a price advantage as they learn how to look beyond the limited domestic market, but they also set the groundwork for sales opportunities for U.S. producers when the market conditions are conducive.

According to the Council, USGC is capitalizing on Russia's transitional period as Jay O'Neil, USGC consultant and senior agricultural economist with Kansas State University's International Grains Program, is in St. Petersburg this week conducting risk management workshops for Russian grain traders and poultry industry representatives. Northwest Russia, where St. Petersburg is located, is a grain deficient region which two years ago ran out of grain supplies.

"With the switch to a free market society, Russian traders did not know how to forecast prices or supply and demand," Corry said. "They responded by importing grain at $200 a ton from the southern region of Russia when they could have imported U.S. corn at $160 a ton had they known how to look at the international market."

Jere White, executive director of the Kansas Corn Commission, a Council member, was in Russia in October 2006 when the St. Petersburg region ran out of corn supplies. He says at the time, they tended to deal with their needs on a hand-to-mouth type basis and didn't know they were out of corn until they were out of corn.

"The poultry feeders wanted corn in their poultry diets and did not want to switch feed ingredients, yet the millers couldn't satisfy their needs," White noted.

Meanwhile, the Council's risk management workshops aim to prevent a repeat of such a situation. Due in part to Council work, Russian importers began futures trading for the first time in April this year.